May 13, 2013

Our society is slowly coming to the realization that everything is connected and interdependent. Crises are occurring more frequently – from bank crashes to droughts and hurricanes – prompting individuals, corporations and governments to consider how actions ripple outwards to create unintentional effects.

Most of us, however, spend our waking moments immersed in fragmented, siloed, disconnected lives and organizations. Interconnection is still relegated to theory, not part of daily routine. Our education system and MBA programs drill students on facts, subjects and linear cause/effect, not relationships and systems. Chain booksellers and big data slice the book market into ever-smaller niche categories that don’t reflect the complex nature of our actual lives. Healthcare specialists treat isolated aspects of systemic diseases without addressing the full complexity of the human body. Like a fish unaware of the water in which it swims, we take this pervasive worldview as “just how things are” even as we gripe about its side effects.

Ours is not the only worldview

Yet a look at Asian culture reveals a fundamentally dissimilar way of seeing the world. Eastern philosophy and society are more holistic, with a focus on relationships, context and interconnection. Language reinforces these differences: Chinese characters are pictograms, the meaning of which must be interpreted through context, whereas in the West our language is built on modular letters, words and grammar. Even the practice of feng shui for choosing building sites (including Hong Kong skyscrapers) reflects the idea that the factors affecting outcomes are extraordinarily complex and interactive.

History can shed some light on these differences. Ancient Chinese culture was strongly influenced by Confucianism, which focused on relationships and co-humanity, and by the need to navigate society’s complex social structures. Conversely, Westerners are philosophical descendants of the ancient Greeks who celebrated individuality, autonomy, and personal control. Their inventions of logic, categorization and linear “cause & effect” thinking comprise the now-invisible foundation of so-called developed civilizations.

"The Greeks tended to focus on the object and to explain its behavior with reference only to its properties and the categories to which it belonged. In contrast, the Chinese recognized that action always occurs in a field of forces… The ancient Greeks saw stability in their worlds, while the ancient Chinese saw change; indeed, in line with the yin and yang of the Tao, always being in the process of reverting to the opposite of the current state." (source)

Studies have shown that the two dimensions are highly correlated; ie. cultures that think independently like the US also think analytically, and cultures that think interdependently like east Asia also think holistically. Theorists propose that "this relation occurs because interdependence prompts wide attention to context whereas independence focuses attention on objects.”

These cultural differences have profound implications for solving the complex challenges of our day. An article in Psychology Today observed that

"analytic thinkers are more likely than holistic thinkers to commit the fundamental attribution error—overestimating the impact of persons and underestimating the impact of situations when explaining events. They’re also more likely to predict that a trend (in the stock market, for example) will persist and not reverse direction."

So unlike holistic-thinking cultures who understand that “events are the products of external forces and situations” and who think in terms of systems and change, most Westerners may be wired to think and act in a way that undermines our long-term sustainability: me versus we, silos versus systems.

It's complicated.

Perhaps this cultural programming is why complexity and systems thinking hasn’t gained much traction in the corporate world after a couple decades of buzz in the business press. A recent post on HBR.com titled “Why Managers Haven’t Embraced Complexity” highlighted several of our culturally inherited traits:

"Complexity wasn't a convenient reality given managers' desire for control. The promise of applying complexity science to business has undoubtedly been held up by managers' reluctance to see the world as it is. Where complexity exists, managers have always created models and mechanisms that wish it away. It is much easier to make decisions with fewer variables and a straightforward understanding of cause-and-effect... Placing a rigid priority on maximizing shareholder returns makes things clear for decision-makers and relieves them of considering difficult tradeoffs."

In a similar vein, a Fast Company article noted that “systems thinking, despite its wartime successes never really captured the imagination of business leaders…. the number and sequence of things that must be done has become so arcane that to master it seems all but impossible to the managers in question.”

Me, not we

Our cultural programming not only affects business but also our society’s response to altruistic calls to act and serve for the betterment of others and the planet. New research published in Psychological Science revealed that “public campaigns that call upon people to think and act interdependently may undermine motivation among Americans.” Across three different experiments, the researchers found that European Americans who were primed to think about interdependent behavior showed less motivation and persistence in research tasks than European Americans primed to think about independence.

"Decades of research in the social sciences have shown that fostering people’s sense of independence is the most effective driver of behavior among Americans. “Appeals to interdependence might sound nice or like the right thing to do, but they will not get the job done for many Americans,” says Hamedani. A better strategy for motivating action among European Americans may be to encourage individual effort for the good of the team or collective, urging each individual to 'be the change YOU want to see in the world.'"

Can we shift?

Interestingly, across the previous three studies, Asian American students’ behavior did not vary when interdependence vs. independence was emphasized. The researchers hypothesized that bi-cultural Americans, having been exposed to both modes of thought, were able to see the benefits of both approaches.

Fortunately for us, we’re finding that modes of cognition are not permanently locked in place by either culture or genetics (an implication with which many of you Western systems-thinking readers would agree.) Not only do working-class American adults show “more holistic patterns of cognition” than the average middle-class Americans, we also see differences in cultures like Eastern Europeans, Orthodox Jewish boys, southern versus northern Italians, and even farming villages versus non-farming villages in Turkey. (source)

A report in Psychology Today observed that “each of us has the ability to think either analytically or holistically, a talent that often goes unrecognized,” and goes on to reassure us:

"Can Westerners think like East Asians? Absolutely. And East Asians can think like Westerners. In fact, most of us have the capacity to think analytically or holistically, depending on our state of mind. When East Asians are encouraged to think about their uniqueness, they often “wheel in” their analytical mental module, so to speak. When Westerners are primed to think about their relatedness to others, they often switch to a more holistic way of thinking. The default (or habit) for most Westerners, especially men, is to think analytically—and the default for most East Asians is to think holistically."

Good news indeed. However, our extremely independent, fragmented culture has been built over hundreds and thousands of years; our education system starts the silo-indoctrination process very young, and every other aspect of our society reinforces this view. So attempts to shift our modes of thinking are a bit like turning the Titanic, and we need baby steps to begin weaning ourselves off the “me-me-me” and overly simplistic programming.

An analogy from the Buddhist idea of self can give us direction: We can see a hand as one unit, or a collection of five independent fingers. Each finger is distinct and serves its own role, yet it doesn’t operate independently of the whole. Likewise, our Western culture has focused for too long on individual fingers; we simply need to expand our awareness to realize how we’re connected. And yet we must remember in this process to not solely focus on “the hand” at the expense of the fingers; individualism is a fact of life in our society, and failure to honor that fact will set us up for failure.

So this is a call for both/and thinking. We can celebrate our uniqueness and analytical strengths while also expanding our horizons to include our shared humanity and the environment in which we live; we can align individuals and enable movement towards shared goals as long as the right structures are in place. The next post will introduce one way to do that: what I call creating "intentional coherence" across personal, organizational and cross-sector levels.

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Dear reader, I'd love your thoughts. Have our siloed culture and independent cognitive styles gotten us so stuck in "me" that we'll be unable to see "we" before it's too late? What will America's role be (realistically) in solving the systemic problems that we face given our aversion to complexity?

September 10, 2010

This fall, I’ll be teaching Brand Strategy: Building the Credible Sustainable Brand as part of the newly launched Sustainable Brands Seminar Series. The 5 one-day individual courses will be held in four cities:

San Francisco, hosted by Williams Sonoma – Week of October 4

Twin Cities, hosted by 3M – Week of November 29

New Jersey/NYC, hosted by Johnson & Johnson – Week of December 6

Austin, hosted by AMD – Week of January 24

In addition to my course on Brand Strategy,
the seminars include training on Communications, Product Design, Supply
Chain and Data & Metrics taught by experts in those fields who
share industry case studies and provide you with state-of-the-art best
practices you can apply in the work that you do. Classes are limited to
30 students, so there’s a good opportunity to get some direct
instruction on issues critical to you and your job specifically.

This is the same one-day seminar that I lead on a custom basis for
corporations at 5x the cost, so it’s quite a bargain. And as an
instructor, I’m able to offer you 20% off the tuition fee for however many days you’d like to attend. You can register here using the code spksbs. You can also call my friends at Sustainable Life Media at 415.626.2212 for more information.

November 13, 2009

I recently conducted a webinar on 10 Strategies for Building a Credible Sustainable Brand
in conjunction with Sustainable Life Media. While I'll never again
agree to develop an hour's worth of new content with 1 week's notice
(!), I appreciated the opportunity to pull together a fairly
comprehensive set of strategies that help brands build credibility from
the ground up and minimize the risk of greenwashing. The 10 strategies
include:

July 30, 2009

Just posted Role of Retail in Sustainability on my business blog. I'm surprised at how few retailers are stepping up to the plate and helping consumers make educated choices on sustainable products. Best Buy is a laggard, Home Depot is a leader. If you know what Wal-Mart is doing in customer education, would love for you to contribute a comment.

July 06, 2009

In addition to the email newsletter we send out every month (you can sign up on this page by entering your email address) we’ve recently designed an easier-to-read PDF.

This issue kicks off a series on connecting sustainability with top-line revenue, a topic of interest to many sustainability pros who want to move beyond cost-savings initiatives and build reputation and revenue (and also to marketers looking for additional ways to grow topline revenue). I’ll also be posting the articles here on my blog, and I’d love comments and questions so that I can address key concerns and questions throughout the series.

May 18, 2009

And the sound is worse. The Honda’s petrol engine is a much-shaved, built-for-economy, low-friction 1.3 that, at full chat, makes a noise worse than someone else’s crying baby on an airliner. It’s worse than the sound of your parachute failing to open. Really, to get an idea of how awful it is, you’d have to sit a dog on a ham slicer.
So you’re sitting there with the engine screaming its head off, and your ears bleeding, and you’re doing only 23mph because that’s about the top speed, and you’re thinking things can’t get any worse, and then they do because you run over a small piece of grit...

Creation meetings sound like this: “We need more blue. How are we
going to do that? Phil, you’re our blue man. What should we do here?”

There are other meetings out there, but you will learn to avoid
them. One being the therapy meeting. They sound like this: “Show of
hands, who likes to talk about blue? Or red? I don’t care. Let’s
explore our color feelings for the next 60 minutes.”

I'm looking forward to attending Sustainable Brands '09 on May 31 in Monterrey CA. This conference sits at the intersection of brands and ethical business, an area that is essential for marketers but can dominated by CSR departments in many companies. If building a values-based brand reputation is on your to-do list, I hope to see you there. Here's the current attendee list; pretty impressive.

May 10, 2009

As consumer expectations rise and trust in corporations decline, the
need for ethical business practices is greater than ever. Yet in a
recession, companies seeking to cut costs will likely postpone
important CSR initiatives or cut spending in favor of core business
initiatives.

But it doesn’t have to be either-or. Companies
that consider social and environmental initiatives as potential
innovation platforms and brand builders — not expenses — will come out
ahead...

May 08, 2009

There's been a lot of discussion about elevating corporate responsibility to become a strategic driver of your business. Most companies would like to benefit from their ethical efforts in the form of increased customer attraction and loyalty, yet few have figured out how to do it successfully. When marketing and PR are relied on, it can often backfire in accusations of greenwashing. The secret is to apply brand strategy principles to build your ethical reputation.

April 14, 2009

I've gotten a few emails asking if I twittered... ok, now I do. You can find me @jennrice. I resisted for a while because I knew that I'd spend all day on Twitter if I started (same reason I don't have a TV). I was right.

April 07, 2009

Ok, I’m a bit late to the game, but I just stumbled upon Liberty Mutual’s The Responsibility Project that was launched last year. The discovery led me to investigate whether its focus on responsibility was rhetoric or real...

April 02, 2009

After much thought about whether I should continue my blog on Typepad versus embedding into my website, I've decided that the latter would be the best long-term approach. I'll keep this blog active and will likely post an occasional article about brand strategy, but most of my writing will be found on my new website.

If you have me listed in your blog links, I'd really appreciate either changing your URL or just adding Fruitful to your list.

I have to respectfully disagree with Diane’s assessment. Instead of
missing the point, they actually do an effective job pointing out the
roadblocks to corporate adoption of CSR principles. I applaud the
Financial Times for daring to report that what customers say is important is often quite different than their actual shopping behavior...

March 24, 2009

As I've been talking with people about Fruitful's mission to advance "conscious capitalism," it's become clear that social impact is often perceived as a nice-to-have rather than a critical component to business strategy. Here are 10 reasons why you may want to help your company rethink that notion.

You're looking for profitable growth. According to Ethisphere, the world's most ethical companies have seen a growth rate twice that of the S&P 500. And A.T. Kearney recently reported that sustainable companies are outperforming their rivals during the downturn.

You need to reduce operating costs. For example, Sun Microsystem's new datacenter in Broomfield CO saves over $1,000,000 in electrical costs and reduces Sun's corporate carbon footprint by 6%. Wal-Mart set a goal to reduce packaging in the supply
chain by 5 percent by 2013. Reaching that goal would prevent 660,000
tons of carbon dioxide from entering the atmosphere and
save the company more than $3.4 billion.

Your industry is contributing to social problems. Tobacco and lung cancer, fast food and obesity, oil and war, autos and global warming... it's tough when your entire category carries negative associations. Forward-thinking players in these categories should be thinking about how to disrupt their own businesses before someone else does. Examples include BP's investments in alternative energy, McDonald's healthy menu and the Toyota Prius. There's definitely still room for improvement, but hey, progress is progress.

Your brand or business is capable of being part of a social solution. GE was already in the business of solving energy and water issues, so it wasn't a stretch to create the Ecomagination commitment to become a leader in sustainable energy. Nike's brand is all about unleashing potential through sport, which is an umbrella that easily covers social issues like childhood inactivity.

You're lagging behind committed competitors. In today's transparent world, you don't want to show up at the bottom of an industry review on CSR practices. To be on enlightened consumers' consideration sets, you really need to be in the top 2 or 3. Case in point: ClimateCounts pocket guide shows consumers how to "vote with their wallet" by presenting the best and worst companies across a range of industries in supporting climate change.

You''re in danger of (or in the middle of) a PR nightmare. Nike got on the CSR bandwagon after being accused of child labor violations. Unilever and Starbucks were more proactive, identifying social and environmental challenges in coffee and tea plantations and transforming potential liabilities into triple bottom-line advantage. Lately the financial industry has taken a big trust hit; look for more alignment with and promotion of ethical business practices here.

You're looking for differentiation in a highly competitive industry. Whole Foods disrupted the grocery market. Clorox' GreenWorks is a visibly different option in an overwhelming mass of cleaning products. UK retailer Marks & Spencer's Behind the Label initiative strengthened their brand and boosted profits by 28% in one year. One article notes that "by challenging
consumers to 'Look behind the label' M&S has increased pressure on
its competitors to demonstrate their own efforts."

You want a unified, passionate workforce. GE found that its Ecomagination initiative had a positive and unintended side effect; employees became more energized and broke down silo barriers to help contribute to the cause. According to Kellie McElhaney in Just Good Business, "GE's CSR program turned out to be one of the highest-impact internal unification strategies that the company has ever implemented."

You need to boost customer loyalty. It costs more to gain a new customer than keep an existing customer, so loyalty is one of the easier ways to grow revenue. Loyal customers also serve as a volunteer army of word-of-mouth advocates. Goldman Sachs referenced studies that show consumers identify "being socially responsible" as the most likely factor influencing brand loyalty at 35%, compared with lower price (20%), easily available products (20%), product prestige (3%), company shares your values (14%) and quality (6%).

It's the right thing to do. You spend most of your life sitting behind a desk; why not make that time worthwhile?

March 17, 2009

In reading PWC's 12th Annual Global CEO Study, I found the chart on "drivers of long-term success" during the downturn to be insightful on how CEOs view corporate social responsibility.

Specifically, while 63% rate brand strength and reputation as critical to success, CSR falls to the bottom of the pack with only 20% perceiving it as critical.

These findings suggest that business leaders are not seeing CSR as a strategic way to strengthen their brand and reputation. Interesting.

As I talk to people about Fruitful's mission to align business strategy with social impact, most people immediately think of philanthropy. Few see social impact as a strategic growth platform integral to the brand and business. I believe that will change given consumers' lack of trust in "business as usual" and the increase of businesses that perceive no conflict between the desires of shareholders and society at large.

GE is a great example of a company that has so tightly aligned CSR with their brand that it's hard to tease the two apart. "Ecomagination is a business initiative to help meet customer demand for more energy-efficient products and to drive reliable growth for GE; growth that delivers for investors long-term."

Eventually, the 80% of business will follow the 20% of leaders like Immelt who value the business-critical role of CSR (or as I've redefined it, corporate social opportunity.) As Immelt once said, We’re not in the business of hobbies. We're in the business of making things that are economically justifiable."

Are you relegating social impact to philanthropy or feel-good programs? Then it's time to shift your thinking about social impact from hobby to win-win competitive advantage. Yes, you may have to cut some pet projects to reallocate CSR resources to better support and align with your brand and business goals. You'll find that it will pay off.

March 11, 2009

What to call these innovative businesspeople is the subject of some
debate. The terms “social entrepreneur” and “social businesses” are
generally used to characterize people and businesses that bring
entrepreneurship to ventures that have a social mission. Yet there are
those who would limit the social entrepreneur label only to those
without any profit motive. A separate, but related, category are
companies referred to as “socially responsible.” These are generally
companies whose core business does not necessarily have a social
mission, but who display socially responsible characteristics, like
environmental sensitivity.

I'm using the term Corporate Social Opportunity to refer to businesses with a desire to do well by doing good. CSR, or corporate social responsibility, only goes so far... it often refers to what a business should stop doing (stop wasting resources, stop turning a blind eye to unfair labor practices, etc.) but it doesn't truly address the opportunity at the intersection of profit and social good.

The NYT article focuses primarily on start-ups, but plenty of established companies fall squarely in this realm. Whole Foods is a good example, and even Walmart, which is already making an impact in packaging, detergent and consumer electronics industries to be more sustainable.

February 11, 2009

I was just pointed to The Girl Effect, a shared mission to create opportunities for girls (change agents) around the world and especially in developing markets. It's rooted in the work of the Nike Foundation. I encourage you to watch the video opening of the website; it's very well done.

A new study by global management consulting firm A.T. Kearney indicates that firms with "true commitment to
sustainability" outperform industry peers in the financial markets. The study, called Green Winners: The Performance of Sustainability-Focused Companies During the Financial Crisis, found that in 16 of 18 industries, sustainability-focused companies outperformed their peers by 15% in a six-month period. The performance differential translated to an average of $650 million in market cap per company.

The big takeaway for me is seeing that the companies prospering now were the companies who embarked on this journey ten years ago, well before it became a media-worthy item. Now these companies have pulled ahead of the pack in terms of competitive advantage and are building momentum.

The report cited as an example a global consumer packaged goods company that "views sustainability as not just a philanthropic endeavor but a fundamental part of its business strategy." It began its sustainability efforts more than 10 years ago and has incorporated sustainability
practices in every link of the value chain.

Despite increasing production volume by 76 percent since 1998, and
over the same period reduced greenhouse gas emissions by 16 percent,
water consumption by 28 percent and energy use by 3 percent, according
to the report. In 2007, improvements in energy efficiency led to a $30
million savings. Over a 16-year period, the company saved more than
$500 million by optimizing packaging volume.

This is a trend that is not going away. If your business hasn't committed to baking in sustainability (and/or a social-good outcome that's more directly related to your business) into your business strategy, the mounting data on both consumer expectations and competitive advantage suggest that you will be left behind.

February 09, 2009

I just received a pointer to www.dotherightthing.com, a community-driven site that collects news stories about companies and assigns a social-good rating based on the collective news-story ratings by readers. Check it out and see how your company rates.

Virgin offers a great case study of a company that's seeking ways to align inputs and outputs with social good to create both competitive and societal advantage. They're making an active effort to not only run more sustainable businesses, but also to integrate social good into the customer experience and raise awareness and social engagement among their customers.

Virgin HealthMiles is a first-of-a-kind health incentives program that empowers Americans to take greater control of their health and fitness. In a pilot deployment in 2006, 40% of members who had previously been categorized as inactive moved up to the active category. Additionally, 21% of members saw a reduction in hypertension over a period of six months.

Inputs as Outputs (turning sustainability into competitive advantage)

Virgin Trains is actively marketed as the more sustainable travel option compared to cars and planes. They also launched Europe's first 20% biodiesel train.

They're also leveraging the power of community, actively engaging customers in socially good actions like:

VirginUnite, Virgin's non-for-profit entrepreneurial foundation. In addition to being a social entrepreneur incubator and a consultancy to Virgin businesses to be a force for social good, it's also a facilitator to help everyday people start their own fundraisers.

Virgin Mobile's RE*Generation, a pro-social initiative
to build awareness about the issues surrounding at-risk youth and teen
homelessness. Musicians donate ringtone royalties on selected tracks, and Virgin Mobile donates 100% of net profits from the same selected tracks. Virgin Mobile customers can also
contribute to The RE*Generation by sending a text message to deduct $1
from their balance as a contribution or making a cash donation via credit
card at VirginUnite. Their blank2clothe initiative, in partnership with American Eagle Outfitters, donates clothing to homeless youth for every 5 videos that customers upload.

I'm compiling a list of companies who have baked social good into their brands, and will be writing about them on this blog. If you have other examples (Whole Foods, Ethos water, Timberland, Zipcar come to mind) I'd love to hear about them.

February 04, 2009

I just ran across an article in WSJ that answered the question,"How much are consumers are willing to pay for ethically produced goods?"
These statistics are only among coffee drinkers (cotton t-shirt buyers had a much narrower range of price elasticity) but it's a good data point that the "conscious consumer" is no longer a niche market segment.

A recent study called Rethinking Corporate Responsibility by Fleishman-Hillard and the National Consumers League gives even more evidence. 52% of consumers seek out the CSR record of specific companies, and 82% say that social responsibility is influential in purchase decisions.

I think most companies understand this and are making efforts to improve their business practices. Some are leading the way and others are lagging, but for the most part I'm optimistic that progress is being made.

What about you... optimistic or pessimistic about businesses' abilities to meet both shareholder and consumer expectations?

(Via JustMeans) Sun Microsystems recently completed the largest data center consolidation project in the company's history. It will save 11,000 metric tons of annual carbon dioxide emissions, and save the company more than $1 million in electricity
costs. It will reduce Sun's carbon footprint in the US by
six percent. But they're not stopping there.

Following this major announcement, Sun has also launched new data
center efficiency services to help customers retrofit and build more
efficient data centers as part of its data center Strategy, Design and Build-Out Services based on the same data center design methodologies and best practices Sun used in building its own data centers.

This is a great example of a company aligning its core capabilities with a social-good initiative to achieve triple-bottom line results.

February 02, 2009

After almost two years at Prophet, I am reconnecting with my entrepreneurial spirit to start up a new social-good consulting firm called Fruitful. The focus is on aligning business strategy with social good to achieve triple-bottom-line results. I'm really excited about it... I've been wanting to use my skills to help make the world a better place and I think this will be a great vehicle through which to do so.

I'm a "glass is half full" kind of person, and I believe this is the perfect time to start a business like this. Here's why:

Change equals opportunity. We're seeing a convergence of market forces that indicate that the era of “business as usual” is coming to an end (more on this in my next post.) Game-changing opportunities are being created for businesses to be powerful and profitable catalysts for good. Yet the recession is causing wide-spread, knee-jerk reactions to cut or eliminate spending. Businesses will either be seen as a leader or a me-too in their respective categories when times improve.

Perception is reality.
There’s a lot of skepticism towards companies jumping on the social-good bandwagon. Accusations of greenwashing abound. Socially good business is not about PR programs or legal checklists. The only way to succeed is by embedding social good initiatives throughout your entire organization in a way that supports and extends your brand and business strategy. It’s about walking your talk.

There's a smart way to prune. Many larger businesses have numerous philanthropic efforts that don’t align with their brands or support their business strategies. This is a good time to eliminate scattershot programs in favor of a strategic, focused approach that can effect greater change and drive future growth. And hey, maybe even be profitable.

I'll be writing a lot more about socially good business here on this blog until I get my new website (with an integrated blog) up and running. So stay tuned...

January 02, 2009

I just came across this old post of mine (circa 2005) and wanted to republish as I've been thinking quite a bit recently about interbeing: the state of connectedness and interdependence of all phenomena. I'm finding that I now have a deeper understanding of what I wrote three years ago... funny how that works.

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I've been thinking about "brand as connection" and doing a bit of research on the subject. Most of us view the business world through a component lens (customers, technology, products, departments, etc.), but it's interesting to take a moment and look at the world through a connection lens: what are the connections between these components, and how can they be strengthened?

Robert Putnam, author of Bowling Alone, focuses on a similar concept called social capital. A few definitions:

Whereas physical
capital refers to physical objects and human capital refers to the
properties of individuals, social capital refers to connections among
individuals – social networks and the norms of reciprocity and
trustworthiness that arise from them. (Putnam
2000: 19)

Social capital refers to the institutions, relationships, and
norms that shape the quality and quantity of a society's social
interactions... Social capital is not just the sum of the
institutions which underpin a society – it is the glue that holds
them together. (The World Bank 1999)

Social capital consists of the stock of active connections among
people: the trust, mutual understanding, and shared values and
behaviors that bind the members of human networks and communities
and make cooperative action possible. (Cohen and Prusak 2001: 4)

There is considerable evidence that communities with a good 'stock' of
social capital are
more likely to benefit from lower crime figures, better health, higher
educational achievement, and better economic growth. (infed.org)

Too often, we view creation of social capital as the domain of non-profits and government. Corporations can wield significant influence in this arena, but physical and financial capital (ie components) hold the attention of business leaders. Social capital (connections) can't be quantified and listed on financial statements, so it's usually not acknowledged or effectively managed.

This thought reminds me of another interest of mine, quantum physics. There's an interesting new theory called the zero point field... this might seem to be a random tangent on the subject of social capital, but bear with me. Here's an overview of the ZPF written by Bernhard Haisch, staff physicist at the Lockheed Martin Solar &
Astrophysics Laboratory:

...electric and magnetic fields flowing through
space oscillate like a pendulum. At every possible frequency there will
always be a tiny bit of electromagnetic jiggling going on. And if you
add up all these ceaseless fluctuations, what you get is a background
sea of light whose total energy is enormous: the zero-point field. The
"zero-point" refers to the fact that even though this energy is huge,
it is the lowest possible energy state. All other energy is over and
above the zero-point state. The fact that the zero-point field is the lowest
energy state makes it unobservable... Since it is
everywhere, inside and outside of us, permeating every atom in our
bodies, we are effectively blind to it.

Matter resists acceleration not because it
possesses some innate thing called mass, but because the zero-point
field exerts a force whenever acceleration takes place. To put it in
somewhat metaphysical terms, there exists a background sea of quantum
light filling the universe, and that light generates a force that
opposes acceleration when you push on any material object. That is why
matter seems to be the solid, stable stuff that we and our world are
made of.

So everything's not only interconnected but made of the same stuff. The visible is influenced by the invisible. And no matter how hard we try to control each element of business, there's always some "socio-magnetic" jiggling going on. One could view social capital as the ceaselessly fluctuating energy that either resists or facilitates the movement of physical and financial capital. Business is simply a vast network of human connections and transactions; everyone is exchanging energy (materialized as money, products, communication) to the benefit of all parties. But since, like the ZPF, social capital is everywhere, it somehow becomes unobservable to us. We are blind to it, like fish unable to see the medium in which we are swimming.

Just as physicists are now starting to factor ZPF into their equations to arrive at a more accurate model of how the world works, so too can business leaders factor in social capital into how their business works. If we see the world not as isolated components but as a vast unified and interconnected system, we also see that the more pathways formed (ie. connections between departments, customers, partners, etc), then the more energy flows and the more the system is unified and strengthened.

The advent of new connection tools like blogs, wikis and podcasting is helping to facilitate the shift from component to connection view. Artificial barriers are beginning to drop. For example, we can no longer treat internal and external branding as if they are different things... the brand is the entire system, of which employees and customers are a part. Brands are people and the connections between them. Even if we're talking about a product like an iPod, we're still talking about people having a sense of belonging to the iPod community, sharing playlists, evangelizing to non-participants, etc. As Hugh says, "branding is a spiritual exercise, and the market for something to believe in is infinite." We want to feel a part of something bigger than ourselves.

Think about your business ecosystem, including all employees, departments, outsourced labor, partners, stockholders, etc. This is your social capital. This is the singular energy that powers your business. Is it strong or weak? How connected is everyone? Do they feel like they're part of a big community of shared interests? Or are they isolated in stagnant clusters of matter that experience friction and resistance? It's time to open up. Be transparent. Reach out. Drop the walls. Stop trying to control every conversation. Permit creative chaos. Allow customers to talk to anyone in the company, not just to the guy sitting in a call center on the other side of the world. Form more connections, stronger connections, between every element in the system. When we acknowledge and maximize the power of social capital, our world becomes a powerful place.

December 04, 2008

I've been thinking about the concept of co-creation as it relates to upscale/luxury hotels. There is certainly a macro-trend from Experience Economy (ie. here is the experience we're creating for you) to Participation Economy (ie. here is the space in which you can participate to create your experience.) It's happening mostly on the web, and it's also creeping into actual customer experiences (think Linux, Lego Factory, Apple retail stores, self-service hotels, etc.) yet there's an interesting challenge when it comes to luxury brands: customers are on vacation from work, and they're paying good money to have someone else create an experience for them. I'd be interested in your ideas on how to bring cocreation to life within a luxury brand setting... thoughts?

September 22, 2007

I'm working on a very exciting global hospitality project and working in Zurich, Dubai and London for a few weeks. Today I got to escape for a couple hours and take the train to Lucerne (or Luzern as the locals spell it). Absolutely beautiful city...

Second, Samsonite is striving to play in the luxury-goods market by reinventing itself as a "sexy, high-end label." The brand has launched designer luggage and high-end men's shoes; sunglasses and stationary are in the works. They're looking to compete with the likes of Burberry and Coach.

So how far will a brand stretch? While there are no hard and fast rules, a basic guideline is to determine how closely aligned the extension is from current perceptions. Wal-Mart has built its brand on 'cheap.' The likelihood of successfully extending upwards towards "more affluent tastes" is dubious unless it disconnects the Wal-Mart name using a sub-brand. The Wal-Mart connection with healthcare has a much tighter association -- healthcare costs have spiraled out of control, and Wal-Mart is a very viable brand to bring affordable healthcare to lower-income segments. And by doing so, some (needed) positive brand equity can be generated for the master brand.

Samsonite is another story. By their own admission, "people still think of that hard, plastic suitcase when they think of Samsonite." It's associated with durable, not with style. Last year they acquired Lambertson Truex, a high-end leather-goods maker; IMO, it would have been an easier and less expensive proposition to position Truex as the high-end brand and keep Samsonite as the durable mass brand. That would give the company two distinct brands to appeal to two very distinct target audiences, and it would keep the aperture for revenue opportunities much wider. Repositioning Samsonite can be done if they create a cool enough product, but it will be challenging and I'm not sure it's the smartest move for the company. Time will tell.

May 05, 2007

After almost 4 years of running Mantra, I'm headed back to office life. I accepted a position at Prophet, a niche management consulting firm specializing in brand strategy for Fortune 500 companies. I'm writing this post from my hotel room in a resort just south of Playa Del Carmen, Mexico, as we wrap up a very fun all-company retreat. Everyone here works hard but also knows how to play hard, and we've had a terrific time. I'm excited about working here; the projects are much larger and more complex, and there's a nice balance of left and right-brain activity. Never a dull day.

So I'll start writing more about my thoughts and learnings around our key service offerings, including a new one focused on marketing effectiveness. We have an amazing research & analytics team who can actually tell you which 50% of your advertising dollars are wasted versus working. I also have the honor of working down the hall from Dave Aaker, the vice chairman of Prophet and the man who literally wrote the book(s) on brand strategy. I'll be posting some interviews with him as well as a few other senior execs here on strategy-related issues and trends. So stay tuned.

April 22, 2007

Five words or less. Use consumer language, not "clientese." Follow the 4D rule. These are a few of my guidelines for writing positioning statements that are compelling and executable.

Five words or less. See if you can write your own tagline that clearly captures the essence of your brand. And don't whine and say that's a copywriter's job... if you can't boil down the brand essence into a short, memorable phrase, chances are a copywriter can't either. It's not a quick and easy process, but it pays off.

Use consumer language. Too many times I've worked with clients who've insisted that we use certain phrases in the positioning that make sense internally but not to customers, or they're so focused on features that they forget that customers care more about benefits. To get yourself in a customer state of mind, write your positioning statements from a customer's point of view. For example, "If I choose x instead of (alternative), I will (get what benefit) because (primary reason to believe)"

The 4D positioning rule is desirable by customers, distinctive from the competition, deliverable by the company, and durable over time. A good brand position will sit at the intersection of these four requirements.

Some companies live and breathe their brand positions, and they're articulated perfectly in rarely changed tag lines. Apple's Think Different and Nike's Just Do It are so powerful that they are the "north star" for those brands. I can think of other great companies like Southwest Airlines that change tag lines often but never waiver from their brand essence.

If you're not an Apple or SWA, it's important to follow the three rules above to determine your future state (where you want to be) and work your way forward using internal alignment, operational improvements and marketing tactics that -- over time -- coalesce into a coherent, memorable brand.

April 19, 2007

I read in the WSJ a couple days ago that agency/client relationships are
becoming harder to sustain… not surprising as marketers are under increasing
pressure to drive results. In the good old days, clients were happy with
increases on brand awareness and preference metrics. But given that the average
tenure of CMOs at top-branded companies is only 23 months,
there’s an intense pressure to demonstrate results – fast – and often at the
expense of the brand and its customers.

Many times, a new CMO sends the current
advertising agency into an unproductive frenzy when they, upon joining a new company,
immediately question their predecessor’s strategy. If the agency isn’t immediately fired
(which often happens), an incredible amount of time is spent on the re-education of the new
CMO — oftentimes as much as three months. Also, because advertising campaigns are
tangible, new CMOs have a tendency to quickly look to the creative for a change in
direction. Clearly, these knee-jerk course corrections, designed to demonstrate that the CMO
is making an impact, are not only expensive propositions, but, more importantly,
force the consumer to accept yet another brand positioning.

Ad agencies have to shift their thinking from pure creative to
advertising that moves products. If agencies don’t have senior staff that can
speak C-level lingo and understand how to tie creative execution to business
results, we’ll see more and more of agency/client relationships go sour. On the
other hand, clients often fallaciously think that advertising is (or could be)
a magic bullet. They no longer have the patience to stick with a campaign (or
an agency) for the long haul. And lastly, most aren’t empowered to make the
kind of customer-experience decisions that would actually move the revenue
needle. So they lump all these expectations onto their agencies and expect them
to work a short-term miracle. Clients and agencies both can take steps towards
improving their partnerships to be more win-win.

January 10, 2007

I've been writing about companies who are committed to making a difference. I think the issue boils down to a very simple question: "Who else can win?" The primary focus has always been on how companies make money... ie. how the company wins. But precious few companies contemplate how their business model can help others win too. I'm calling this "mindful business"... stopping auto-pilot for a moment to really think about the ecosystem in which you operate, and what you can do to improve it.

Brands win when they help others win.

A few examples:

Dove's Campaign for Real Beauty addresses self-esteem and our society's distortion of beauty. It's a great example of a mindful marketing program that benefits everyone.

Starbucks' concept of social responsibility is embedded deep into its brand, including conservation, community volunteerism, commitment to coffee producers, the Starbucks Foundation (youth literacy), Ethos water, socially responsible investing, and more.

Squidoo enables lensmasters to send their revenues directly to a charity of their choice (Squidoo will add your favorite charity if it's not currently in their system.) Over half of Squidoo's lensmasters participate in this program, and Squidoo itself donates 5% of net revenue to the charity pool.

Intel's World Ahead program is committing a $1 billion investment to extend broadband PC access to the world’s next billion users while
training 10 million more teachers on the use of technology in education.

From its earliest days, Patagonia has been committed to environmental activism. Their mission statement is to build the best product, do no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis. They have an impressive list of actions that their mission has inspired.

Many companies wanting to fill in the "social responsibility" checkbox will adopt a non-profit or encourage employees to volunteer. Not bad, but this type of add-on activity won't gain traction. Mindful businesses tightly integrate a social perspective into their current business models. This is about being, not just doing. In the examples above, each company is mindful of their role within a larger ecosystem and seeks ways to leverage their role to strengthen the entire ecosystem. Their beliefs and actions attract like-minded, passionate customers and employees. Everybody wins.

December 18, 2006

Like heroic individuals, Heroic Brands are motivated by something bigger than themselves. They believe it just might be possible to change the world. Heros are usually ordinary people who end up doing extraordinary things; likewise, heroic brands might sell t-shirts or software or skin care, but they do it with the awareness and intention to make a much wider positive impact. Heroic brands employ big-picture people who actively seek ways to turn day-to-day business activities into catalysts for social and ecological improvement. ROI becomes Return on Intention, where intention embodies what is good for the business AND good for the ecosystem in which it operates. Heroic brands act like magnets that attract employees and customers who share the intention to make a difference. They remind us that making a living can actually feel good.

I've been thinking about brands that are making a difference in our lives and society, and I used the term "worthwhile brand" to define them. However, I don't think that term sets the bar high enough; as one reader commented, there are plenty of brands that are "worth" my time and effort.

So why not just call it corporate responsibility? A widely quoted definition by the World Business Council for Sustainable Development states that "Corporate
social responsibility is the continuing commitment by business to
behave ethically and contribute to economic development while improving
the quality of life of the workforce and their families as well as of
the local community and society at large." There's also a more easily quoted slogan, Doing Well by Doing Good. All of this sounds great and admirable... so why am I searching for a new term?

A few reasons. First, words carry a lot of underlying meanings and associations. When you think of the words responsibility and behave, what pops into your mind? Maybe I'm the odd one out here, but I think of my mother and house rules. I think about times when I was a young girl getting into trouble because I didn't behave the way I should. I think of what I have to do vs. what I want to do. I think of chores. I think "not fun." The term "corporate responsibility" implies that the people at corporate HQ -- execs and board members -- are responsible, taking the emphasis off the individual. And perhaps that's why corporate responsibility has typically been encoded into rules, programs and accounting standards. Sometimes it's delegated to HR to initiate charity or volunteer programs. Other times it's used as a tactic for good PR (note Enron's yearly "Corporate Responsibility Annual Report" and tobacco corporations' social reports.) Rarely is it a mentality that's embedded in the DNA of the culture.

Back to definitions: responsibility and behavior are things that you do. Character is something that you are. If you're focused on actions, you create your to-do lists and check off the fact that you did your one good deed for the day. If you're focused on character, then your identity and intentions naturally create win-win opportunities for everyone involved. It becomes fun and rewarding to give back and "do the right thing." Corporate responsibility is the effect, not the cause.

Brand building focuses on character. If we're interested in how companies can act for the good of employees, customers, communities and the world, then we must choose words that are motivational and aspirational... words that define character (cause) not behavior (effect). Initially I used the word worthwhile, but in hindsight I see that I was still focusing on the effect. Now I'm thinking along the lines of noble, upstanding, honorable, and integrity. These are aspirational character traits for a brand. When used as hiring criteria, these traits can create formidable brands that make measurably positive impacts on the world.

December 15, 2006

I'd like to elaborate on this morning's post on Worthwhile brands, ask a lot of questions, and then open this up for discussion. My earlier post discussed some initial ideas for defining a worthwhile brand: does it measurably improve quality of life, make the world a better place, or leave no trace on the Earth? But of course nothing is so black or white. I'm trying to find the line between worthwhile and the rest, and it's pretty damn hard.

I'm going to ramble a bit, so bear with me. First I started thinking about brands that are the opposite of worthwhile: cigarette brands, perhaps, or gambling (but of course smokers and gamblers would disagree with me.) Then there are the irrelevant brands, those running 10th or 20th in their categories with marginal points of difference, doing no harm but contributing to the clutter (I'll come back to this one in another post.) And finally there are good brands -- plenty of them -- that don't make my original Worthwhile cut but they're part of our lives.

The brand that I've thought a lot about is Apple. By all traditional accounts, Apple is a great brand... probably one of the best. But are they worthwhile? According to whom? Objectively speaking, they make computers and music players with an original spin. How does that benefit the world? I think that purists would say: they're not following sustainable business practices or giving to charity, and therefore they don't qualify. But are sustainability and charity the only two ways to create a brand that makes a positive impact on the world?

I think not. And yet there's a danger in opening the criteria too wide; too many marketing and advertising folks latch on to words like "meaningful" and "purpose" and "passion" and dilute their true meanings. I think it's time to raise the bar. But where to raise it, and which brands to exclude? Ahh, now things get tricky. What is the difference between good and great? Between great and worthwhile (ie. making positive contributions to individuals, society and/or our planet)? How is "positive contribution" defined?

Back to Apple. One could say that without Apple, this world would be rather dreary. Many people can't imagine life without their Apple computer or their iPod. It's their form of self-expression, and there isn't a comparable alternative. Does this qualify as a worthwhile and positive contribution? I could argue both sides. And Apple's a member of the coveted club called "cult brands:" Harley Davidson, Ikea, eBay, and the list goes on. These are the guys everyone's striving to be like, right? But do passionate customers make a brand Worthwhile? Not necessarily... but again, where do you draw the line?

Lastly, while I like the term 'worthwhile' because it hasn't been completely diluted from marketing-speak, I feel a bit bad for the good companies excluded by my definition. Does that imply they're worthless? Not my intention, but it could come across that way.

I could keep rambling but I'll stop. I haven't come to any conclusions yet, and I'd love to hear from you.

UPDATE: I do want to clarify that I'm trying to broaden the perspective from "corporate responsibility." I believe that corporate responsibility is vitally important (Brandchannel has a great article on it). However, I'm not a fan of the word "responsibility" because it sounds like a chore, and I think its definition leaves a lot of beneficial businesses out. For example, a number of large tech companies are trying to solve the digital-divide challenge in emerging markets. They're starting to create a virtuous circle where everyone wins (including themselves, of course). And when companies initiate sustainable business practices, everyone wins too. No corporate action is completely altruistic, but I think there are plenty of opportunities for brands to think more creatively about how to benefit more people than themselves. This is what I'm terming a worthwhile brand... but it's broader and harder to define than corporate responsibility.

In the next few posts I'm going to play around with the idea of a worthwhile brand. I like this term because a) it's not overused, b) it implies important, valuable and rewarding. Along these lines, the manager of a worthwhile brand would answer "yes" to at least one of the following questions:

Will this product/service/company...- measurably improve quality of life?- make the world a better place?- leave no trace on the Earth?

And you can't weasel out of the first one with marketing-speak. "Our customers' lives will be improved by yet another brand of toothpaste because they have been long-deprived of grape flavoring." Sorry, that doesn't cut it. However, if part of the proceeds from the new grape-flavored toothpaste goes to provide dental care for underpriviledged children, you've introduced a worthwhile purpose into the brand. Not every product is going to change the world, but brands like Starbucks are, at the very least, "walking softly on the earth." Starbucks' recycled-content cups are expected to lower the company's dependence on tree fiber annually by more than five million pounds. The Gap's RED line is contributing 50% of proceeds to fight AIDS in Africa.

Let's all expect more from the businesses from which we buy, and expect more of the companies where we work. Marketers and executives: how can you can make your brands more worthwhile? Even from a pure business perspective, it's worth thinking about. As Hugh says, "the market for something to believe in is infinite."

December 13, 2006

I haven’t written in a while, I know. I find that when I’m
resisting something, it’s a sign that I need to do some thinking and
reevaluation. So that’s exactly what I’ve been doing, and it’s time to start
sharing my thoughts.

I’ve been struggling with the age-old dilemma of doing
something that satisfies the soul OR doing something that pays the rent. Yes,
I’ve read plenty of books on the subject and had long talks with friends. I’ve
thought about teaching, writing, coaching, counseling… even moving to some
godforsaken place in the world in order to “make a difference.” I've envied a good friend of mine who took a year-long sabbatical to figure this out for herself.

One thing I haven’t thought about until recently is whether
I could make a difference in my own profession. Seems a bit odd in hindsight,
but I’ve finally recognized that I’ve been suffering from cognitive dissonance:
I believe that over-commercialization is leading to the demise of our society,
and yet I’m in a profession of helping companies sell stuff that people don’t
really need.

Hmm. That’s a problem. Somewhere down the line I subconsciously accepted the message that business isn’t meaningful. Looking back at some of my employers
and clients, I can see how I could come to such a conclusion. I've been fortunate to work with some companies filled with passion and purpose, but I saw them as a rare exception.

And yet there are plenty of companies out there that do stand for
something. They’re serving a need and making a difference. But typically these
companies don’t need much branding help; their single-minded passion is the brand, and it fuels success.
Whole Foods wants to improve the way America eats. Nike wants to inspire
people to reach for their best. The Body Shop stands for the pursuit of social
and environmental change. Starbucks is committed to social responsibility.

Many small companies are seeking to make a difference
as well. A good friend of mine has wanted to make a positive impact on
education for years, and he just launched his social education site www.edu20.org. Another friend wants to help
people reach their goals; she maintains a thriving community goal-setting site called Superviva. I recently met the founder of Sustainable Marketing and he definitely walks his talk.

What all these companies have in common is a strong sense of purpose that attracts employees
of a certain mindset. The purpose creates a virtuous circle: passionate
leaders and employees attract passionate customers. The purpose acts like a magnet. This is
what building strong brands is all about. And yet the people who started these
companies didn’t think in terms of branding; they simply followed their passions.

Execs who are looking to marketing, advertising and sales to
become successful are barking up the wrong tree. They’re looking for an
external fix for an internal problem: they either got sidetracked from their original
purpose, or they never had one to begin with. I have heard more than one
executive say, “I’m not paying employees to be passionate; I’m paying them to
do a job.” Ouch. These are the same people who keep tweaking the sales comp
plan to figure out what’s really going to motivate sales people. Hmm… how about
giving them a product they’re really excited about selling? Marketing and sales people are only as good as the products & services they have to work with.

So to wrap up a rather long post, I’ve finally realized that
I don’t have to switch careers or join a non-profit in order to align my values
with my work. We live in a capitalistic society where businesses have a huge
impact on how we live. It’s time we all expected more from them. I’d like to work
with companies who are either doing something they believe in, or else they
recognize the need to create a purposeful brand. I’m currently working with
some great folks at “evil empire” Microsoft who are passionate about helping
small software companies – especially those in emerging markets – become successful.
And that means that I feel good about putting my energy and time into this
project.

Are your values and your work in alignment? Do you feel
great about what you do and who you work for? Kudos to those who have already
figured this out; perhaps I’m just a slow learner. If you answered “no”, what
can you do to help shift your corporate culture to one that is meaningful to
you, your co-workers and your customers? My next few posts will talk more about
creating brands with passion and purpose.

August 23, 2006

1. HP's trying to be cool with a viral video and new ad campaign. From the New York Times:

(The FingerSkilz video) was revealed to be a “viral’’ advertisement from Hewlett-Packard,
the leading edge of a new global campaign that aims to imbue H.P.’s
machines with some of the coolness more commonly associated with Apple.

H.P. executives say
the new campaign, which includes television and print advertising in
addition to a variety of edgier approaches, is aimed at shaking up
perceptions of the company as slightly stodgy, an image that has been
reinforced by conservative corporate brand campaigns with themes like
“everything is possible.’’

Hmm, so HP wants to be cool like Apple? Ok. First, let's compare company names: HP: blah. Apple: cool. How about web site and advertising? HP: blah. Apple: cool. Now here's a quick test. Which laptop below is cool?

Yep, you're very good. And what brand is the black computer below? Wrong, it's a Dell. Just kidding... it's an HP. But you probably couldn't tell at a glance, could you?

"It's a quasi-social-networking site for teens designed to allow
them to 'express their individuality,' yet it screens all content,
tells parents their kids have joined and forbids users to e-mail one
another. Oh, and it calls users 'hubsters' -- a twist on hipsters that
proves just how painfully uncool it is to try to be cool."

I can't comment on this better than BL Ochman: "Watching big ad agencies (and corporations) trying to master new media is a lot like
watching people who are having mid-life crises trying to look hip, cool
and young by adopting the toys, tools, and language of youth. It's
rather pathetic."

McDonald's, the world's biggest fast food chain, is
desperate to keep in with the youth market and saw hip hop as the key
to a piece of the action. Last year, they offered to pay artists to rap about Big Macs. The deal was cash per airplay for any song featuring a Big Macs. Not surprisingly, the idea never flew, as not a single band would take up the offer from McDonald's.

DJ Semtex, hip-hop DJ for the BBC's 1Xtra radio station, says artists don't want to be seen to be bought. "The way that they came up the scene was like 'yeah,
we're going to get into this culture and we're going to exploit and
make some money and you're going to buy our food'."

Ouch. Come on, McDonald's... this is so not the way to be cool.

So what makes a brand cool? Stephen Cheliotis, chairman of CoolBrands, said:

"When we ask about what makes a cool brand, the kind of things we get back is authenticity, originality, uniqueness," he said. "These are things that people are trying to strive for. They don't want
to be seen as having the same type of brands as everyone else. They're
looking for brands that have that cool edge."

Authenticity, originality and uniqueness. If your brand doesn't inherently have these traits, please... don't attempt to be cool. You'll look like you're having a mid-life crisis, and you will be laughed at. You can play the "cool dad" who's still a grown-up and acts accordingly, but don't try to be 18 again. If it's important to connect with the younger audience, don't do it with your existing brand... this is the time for a new one that's created from the ground up to appeal to a different mindset.

August 17, 2006

Microsoft is the latest company to capitalize on the “customer-made”
trend. According to the Mercury News, any game enthusiast can now create video games for the Xbox 360 video console.

“(Microsoft) will make available a stripped-down version of its game
development tools for $99. The XNA Game Studio Express software will have
everything someone needs to make a working video game…. The strategy is part of
a plan to make the Xbox 360 more attractive by putting consumers in control of
the content, much the way that consumers are taking to grass-roots
entertainment on YouTube or on their iPods…”

There’s a lot being written about this trend that Trendwatching.com calls “Customer-Made," but larger companies have been slow to embrace the idea. According to Trendwatching, “tapping into the
collective experiences, skills and ingenuity of hundreds of millions of
consumers around the world is a complete departure from the inward looking,
producer- versus-consumer innovation model so common to corporations around the
world.”

Why is this trend a big deal? In a nutshell, product development becomes a
profit center. Customers pay Microsoft for the ability to
create games for Microsoft’s Xbox platform. And by getting the tools into universities with game development
programs, they’re building platform preference among future professional game
developers.

Companies that jump on the customer-made bandwagon can provide incentives through contests (like Electrolux Design Lab), visibility (like LegoFactory) or royalties. In Microsoft's case, aspiring game developers are motivated to produce quality games because of the visibility, reputation, career and even revenue opportunities provided by this initiative.

With the tools, gamers can create their own games on Windows PCs and upload
them into Microsoft's Xbox Live network, which could theoretically sell them to
console gamers via download. Pete Moore (head of Microsoft's game business) said that game creators could share their work with others, for free or for
purchase. "We're very excited to enable game development at the consumer and hobbyist
level,'' said Moore. "For $99, you can create Xbox 360 games. My dream is that a high school
student will get a royalty check from Microsoft some day for a game that sells
on Xbox Live.''

Whether it’s called grassroots innovation, customer-made or co-creation,
this trend is a win-win for companies and customers alike.

August 03, 2006

The debate continues on whether brands must limit themselves to a single product. In my last post, Roger asks, "Amazon is doing very poorly of late. To what extent is performance due to brand extension?"

I would agree with Scott's answer: Amazon has definitely overextended itself to a generic "online shopping destination." It no longer stands for anything meaningful or memorable. And I'm glad Scott brought up Virgin, which is the brand for an airline, a record label and a music chain. What makes Virgin successful doing this where others would definitely fail? I believe it comes down to a reputation for innovation.

Virgin = rebel = Richard Branson. Richard sets out to do something rebellious in whatever industry he chooses to enter. The Virgin brand is based not around what Richard does, but how he does it. Consumers understand that anything with the Virgin label will likely have a unique experience attached to it. Therefore, the only way Virgin can be successful with new ventures is to make each one rebellious and new for its respective industry. If the new venture is innovative, it's consistent with the brand. Unfortunately, the Virgin brand is so closely tied to Richard that it will likely flounder when he leaves (ditto for Steve Jobs.)

And speaking of Apple, the Apple brand can expand from computers to music players and perhaps phones because they are known for "thinking different" and therefore setting an expectation of originality. We don't buy an Apple product, we buy the idea of what Apple stands for. The same goes for 3M, which makes a wide variety of products. Perhaps not so coincidentally, the 3M tag line and mission has always been "Innovation." Google is an innovation machine, generating a lot of new ideas that may or may not fly, but they all hang under its mission of organizing the world's information and making it universally accessible and usable.

An upward spiral is created when the brand drives focused innovation, and innovation reinforces the brand.

Company brands are like people brands. The only individuals whose reputations don't suffer when they switch from one area of focus to another (to another to another) are entrepreneurs who are known for breaking new ground. It is not out of character for Mark Cuban to go from software to basketball and HDTV.

Company brands, like people brands, are most successful when they don't try to pander to everyone's tastes. They have a definite vision that's different from the alternatives. Consumers buy into their vision or not. if it's a clear vision, it's easily recognizable regardless of the product to which it's attached. This is perhaps why some of the most successful companies are associated with a figurehead who has a strong personality. You either love them or hate them, but they probably don't care too much about what you think.

So pick one thing and do it really well. Make it ground-breaking. Earn a reputation for innovation. This gives you the credibility to extend your brand within a reasonable scope and reinforce your groundbreaking image. This isn't easy to do. It's not for everyone. But it's the best way to build flexibility into a brand.

So coming back to the original question about Amazon...although it was initially groundbreaking, its focus has become highly diluted; it's moved from innovative ideas to selling groceries. Big mistake; that's like Mark Cuban becoming a bag boy. By trying to be all things to all people, a brand becomes nothing to anyone.

July 26, 2006

My last post, Positioning for Extinction, stirred up quite a debate. Laura Reis, a big proponent of highly focused brands, suggested that Weber stick to charcoal grills and launch a new brand for gas grills. I took the other side, saying that Weber's brand is strong enough to cover both types of grills (plus, as Marianne points out, their grilling utensils and restaurant.) At last count, over 20 people have contributed to the debate; the comments are worth a read.

As is often the case when smart people are polarized on an issue, I start thinking of the middle ground. How can we all be right? I often agree with Laura when she talks about focus, yet there are very successful brands that don't fit that mold (I'm thinking of GE, IBM and Apple, for starters.) The issue of focus versus flexibility in a brand can depend on a couple factors:

1) How new is the brand? Here's where I completely agree with Laura: new brands should tightly focus. Pick one problem that needs solving and build a reputation for solving it. Netflix solved convenient movie rental. Google solved fast, accurate search. Apple offered a cool new way to compute.

As the brand becomes well-known, it may earn the right to extend its products and services. Sometimes age translates into trust; older brands are familiar and usually within our comfort zone (we assume that if they're still around, they must have done something right.) IBM could move into IT services because of its long history in computing, and GE could successfully move into financial services... although
that was a real stretch; I wouldn't have recommended that one. Regardless, if a company develops a strong reputation that transcends their original product (ie. convenience or trust or safety or cool) then it can consider product/service expansion within the scope of that reputation.

Is expansion always recommended? Not at all. But building a brand is a dynamic, ongoing activity... not something you do once and check off your list. Brands are living entities, and their continued existence largely depends on the environment in which they operate. If markets and consumer preferences change over time, brand flexibility and adaptibility becomes important. Some might say that changing times require a new brand; in most cases, I'd disagree. Companies pour a lot of money into building a brand over the years; if it executes well and earns trust, then there's a big bank account called 'brand equity' that would be foolish to discard. Which leads me to #2...

2) How much trust has the brand earned? To use an analogy, let's say I hired an assistant to help me coordinate projects. Would I trust her to take on strategy work, or customer interviews, or client interaction? No.... at least not at first. If she's not a great project manager, I'll let her go. If she's good at project management but doesn't show an aptitude for anything else, I'll keep her as a project manager. But if she earns my trust and shows a willingness to learn, I'd be quite open to testing her out in other areas... and pretty soon she might be running with projects of her own. I think you can see where I'm going with this.

Customers "hire" a company/product/service to fill a certain role. After building up a set of perceptions about that company, they know to either replace it, keep it for the specified role, or expand their relationship with it based on earned trust.

In my analogy, the assistant's 'brand' is not based on being a project manager. If I trust her with other tasks, it's because she's built a personal brand on how she works, not what she does. In the "focus" philosophy, that person must stay a project manager her entire life; in the "flexible" philosophy, she can extend into other areas as long as she proves that she can build on her strengths and that the new role fits her strengths.

So Apple should not confined to being a computer brand because its reputation is not based on what it does (computers) but how it does it (cool). The Apple brand easily encompasses a broader range of products as long as they all deliver on Apple's cool reputation. Conversely, Comcast (in my personal experience) should stop trying to get into telephony and internet access until it's earned a solid reputation as a cable provider. If I have continued problems with my cable service, why should I trust them with other services? By spreading themselves too thinly, they end up not doing anything well.

So as you build your brand, think both about your core offering (what you do) and what you want to be known for (how you do it). The latter part -- which is ultimately your reputation -- provides the flexibility for your brand to transcend your initial product or service offering if it makes sense. And yes, there is a point where too much flexibility completely dilutes your brand. Unfortunately there are no hard and fast rules in this business; we can debate this issue for weeks, and everyone can provide examples to prove their respective points. But at the end of the day, every brand must consider a multitude of factors that go into this decision. Like people, brands are highly personal and individual. What is right for one is not necessarily right for all.

July 20, 2006

I just came across Laura Reis' post about why Weber should limit their brand name to charcoal grills (excluding gas) and I just have to disagree. Laura says:

Trying to cover all
the new emerging categories with one brand name will weaken your brand
in the mind of the consumer as new brands are launched by specialists.
Keep Weber as a
“charcoal” brand, period. And launch the gas grills with a new brand
name. Maybe even a new name for the portable gas grills...

After you build a leading iconic brand, the last thing you want to do
is undermine it with a line extension that goes against the core belief
of the brand... You build brands by being first. Weber was the first covered-kettle grill.

OK... so following that logic, the railroads were actually smart to think of themselves as being in the railroad business instead of the transportation business. And IBM was definitely wrong in putting the IBM name on PCs and services when mainframes became obsolete. And McDonald's was wrong to add salads to its menu because it goes against their "hamburger" positioning. Following this logic, there is no reason to launch line extensions and new products under the same brand name, regardless of changes in the market. Hmmm.

I guess I see things a bit differently. When you position your brand on what you do (charcoal, hamburgers, computers), it can only lead to extinction. Rather, base your positioning on how you do it (ie. a higher-level benefit), which allows you more flexibility over time. Google's brand position isn't search, it's organizing the world's information. Nike isn't shoes, it's passion. McDonald's isn't hamburgers, it's convenience.

And back to Weber. A quick search shows that while the grill industry is flat, shipments of charcoal grills are down 32% while gas grills are up 83%. The article states:

"Right now, grillers and barbecuers are looking for more convenience, more safety and more versatility. Because they are easier to use, LP gas grills have shown steady growth in sales
over the past few years. Most grill owners (55%) say their next purchase will be a gas grill as opposed to 29% who plan to buy charcoal grills."

So in a nutshell, Laura is suggesting that the Weber brand should just die out with charcoal grills.

The Weber brand is far bigger than charcoal. A more flexible position that's loaded with emotional attachment is tied to backyards and barbeques. As Laura noted, Weber's been around since 1952; there are a lot of collective backyard memories tied to Weber. That's where the brand equity lies... not in a lifeless piece of charcoal.

June 06, 2006

I read two articles this morning about how Google's new spreadsheet doesn't come close to competing with Microsoft Excel. Jake at GMSV writes,

"Too bad 'Excel for Dummies' was already taken. Google uncrated its latest indignity to Microsoft and its Office suite this morning, a Web-hosted spreadsheet program for the collaborative management of structured data. A half-assed version of Excel,
Google Spreadsheets uses many of the same formulas and file formats as
Microsoft's ubiquitous product, but is missing the program's more
powerful features -- macros, charting, autofilter and drag-and-drop
capabilities."

"Google Spreadsheets looks interesting, and we're looking forward to
playing with it when Google starts inviting people into the controlled
beta. But without advanced features like macros or pivot tables,
Google's newest Lab experiment just isn't close to Microsoft Excel."

Ok, show of hands... how many of you actually use pivot tables and macros? The 80/20 rule would suggest that 80% of Excel users use 20% of its features... and that's probably being too generous. Sure, enterprise users wouldn't go for Google's hosted version due to security risk, but that's beside the point.

Google's strategy is not to create me-too Microsoft products that are loaded with tons of features. As I see it, Google is taking a much longer view, going for unserved and overserved markets that Microsoft apparently doesn't want. And they're doing it brilliantly, under the experimental "beta" banner that tells people not to take them too seriously. This is the strategy outlined in Clayton Christensen's book, The Innovator's Solution. (If you're in business and haven't read this book, stop reading this post and order it now. Seriously.)

Let's make this into a much broader discussion around the general principles.

Many products are too complex for a lot of people (domestically and internationally.)

People don't like to pay for what they don't use.

Many would be willing to pay less for a niche product with less functionality.

Unserved and overserved markets can often be larger than established markets served by incumbents.

Industry disruption happens with innovators create simple, low-cost options that are initially scoffed at by established markets.

The Japanese car manufacturers were initially not perceived as a threat to American car manufacturers. The Japanese started at the bottom of the market, selling inexpensive and lower-quality vehicles that didn't yield the high margins of bigger luxury cars. They were considered 'safe' competitors because they tackled a market that the incumbents didn't want. Yet the Japanese slowly and quietly gained experience, improved quality, kept costs low and crept up-market. Now American car makers have been pushed into a corner; they still lead in trucks and SUVs, but not much else.

So going back to Google's "half-assed" version of Excel: if they're following the classic path of industry disruption, they should be pleased when they hear scoffing remarks about their beta products. This allows them room to establish a foothold at the base of the mountain, serving customers that Microsoft (apparently) doesn't want. They can gain experience, add new features, gradually move up-market, and eventually take the high ground.

If Microsoft really wants to keep Google out of its territory, it must not cede the bottom of the market. We're way overdue for a cheap, stripped-down version of "Office Lite" for all those new computer users domestically and internationally who don't need the extensive functionality of the current product. But if Microsoft acts like a typical incumbent, they'll be more concerned about potential cannibalization of its current product and will keep pushing to add new whiz-bang features that target an increasingly narrow user base.

How do these principles apply in your business? If you work for an incumbent in a mature industry, is there a sizable market that could use your product, but with fewer features and at a lower price point? This is probably where a smart competitor will attack.

May 25, 2006

A friend of mine has an interesting job opening with a angel-funded start-up here in San Francisco. Sounds like a fun ground-floor opportunity! Read on for details.

--------Rapleaf , a ratings system for commerce, is looking to hire a founding biz/marketing person (non-engineer). We allow buyers and sellers (on sites like craigslist, classifieds, auctions, etc.) to rate each other. Rapleaf is backed by Silicon Valley's most well-known angels. Our goal is to make it more profitable to be ethical.

What will this person do?

Everything that is not engineering-oriented including:* Marketing* Business development* Product stuff* Finance* Recruiting* Customer service systems* And more

This position will be one of two non-engineers at the company. We're looking for a really smart, motivated, multi-tasking, entrepreneurial, and highly-adaptable person.

This person must:* Be pro-active* Be ready to work extreme hours and in a chaotic environment* Self-manage and potentially manage others* Be able to quickly grow as the company grows* Laugh a lot and generally be very happy* Have a strong desire to build a more ethical society

We're looking for the very best person, and we believe that person should be well-compensated:

* High salary and stock* Opportunity to make commerce more profitable to be ethical* Opportunity to change the world* Be a part of a founding team of a game-changing company

Our office is in downtown San Francisco (one block from the Montgomery BART station) - the best location in the world. You will need to be based in San Francisco (or very close to San Francisco) and we will relocate the right candidate.

May 21, 2006

Last night I wandered down to my favorite bookstore (Browser Books on Fillmore & Sacramento) where I discovered Adventure Divas, written by Holly Morris. I've been suffering from a bit of existential angst lately, feeling like there should be more to my life than this soft complacency that seems to infect much of western civilization. I've been itching for an adventure, so the title called to me.

And so I read about Holly, who chucked her day job in established media to create a television series about real-life heroines making a difference in places like Cuba, India and Brazil. Holly's on a mission to find like-minded, risk-taking women around the
globe, and perhaps unite them all into a new model of power and
leadership. Her tales include hunting wild boar in Bornio; visiting a brothel in Mumbai where 8-year old sex slaves service up to 20 clients per day; bonding with wild orangutan infants while their native habitat is being methodically destroyed by 24/7 mechanized logging and palm-oil plantations.

I was hooked. I wanted to join the cause.

I put the book down in the middle of the first chapter and rushed to my computer to visit their web site. I wanted to read Holly's blog. I wanted to connect with women around the world who were living their passions. I wanted to meet other self-proclaimed and unapologetic nomads and free spirits (which somehow makes my own nomad tendencies more acceptable to myself). In short, I was looking to belong to a community of adventure divas.

Yet despite AD's lofty ambitions and objectives, the web site is pure 'traditional establishment': a static site, no interactivity, no blog, no community. Just a place for them to promote their show and their books. What an incredible disappointment. I filled out a form (a form!) to express my hope that they would create a community for this global affinity group, and volunteered some time to chat with them about how they could do it. So many possibilities! What about a destination that allows people to contribute funds to help local divas make a difference in their corners of the world? A mere $100 would probably emancipate some little girl from a life of slavery in the sex trade. What about a community that connects mentors with those who want to discover their adventurous, passionate sides? The web is viral; TV is not. TV certainly gets exposure, but it doesn't support grassroots efforts to change the world.

I am anxious for the day when static web sites are ancient history. Static web sites are dead, musty things. What gives them life is a sense of community, of contribution, of connection. Chances are, there are plenty of volunteers who can inject some life into your web presence... if, that is, you're in a business that inspires some passion. And if you can't find anything in (or related to) your business that a customer could get passionate about, you might start wondering why this particular outlet is where you've chosen to pour 40+ hours per week of your life's energy.